Macau’s economy will contract by 24% in 2020 due to the Covid-19 pandemic, according to Fitch Ratings, which kept the territory’s risk rating unchanged at “AA” with a negative outlook, according to a statement issued on Tuesday in Hong Kong.

The forecast of a second consecutive year of economic contraction, after a decline of 4.7% in 2019, is based on the fall of around 40% in revenue from gaming, due to the territory’s huge dependence on casino revenues.

“Macau is one of the largest casino gambling centres in the world,” said Fitch, adding that this industry accounts for 51% of aggregate activity, 22% of employment and more than 80% of tax revenue.

Fitch Ratings recalled the strict measures applied by the local government to contain the spread of the new coronavirus, including 15-day suspension of casinos in February this year, more stringent controls on the entry of visitors from China and a temporary ban on the entry of non-residents.

“These measures inevitably had a devastating impact on the gaming industry, whose revenue fell by more than 80% on year in February and March, due to the drop in the number of tourists from Mainland China, the largest source of visitors,” it said.

The Fitch Ratings forecasts are based on the idea that the pandemic will be contained in the second half of 2020, and Macau’s Gross Domestic Product will post growth of 12.6% in 2021.

The International Monetary Fund (IMF) recently projected that Macau would record a contraction of 29.6% this year, in addition to the fall of 4.7% in 2019, according to the World Economic Outlook.

The report added that in 2021 Macau’s economy will grow at a rate of 32.0%, almost cancelling out the fall seen in the previous two years.

Macau’s GDP recorded a real contraction of 4.7% in 2019, to a total of 434.7 billion patacas (US$54.337 billion), and GDP per capita at current prices fell by 6.6% yo 645,438 patacas (around US$79,977).

The Macau Statistics and Census Bureau is due on 25 May to publish its GDP figures for the first quarter of 2020, a period in which the new coronavirus outbreak began. (macauhub)